Post on 06-Jul-2020
Connecting Markets East & West
© Nomura © Nomura September 22, 2015
Case Study: Nomura’s Strategies on Globalization and
Transformation
Takuya Furuya
Senior Managing Director
President & CEO
Nomura Financial Investment (Korea) Co., Ltd.
Consolidation in Banking Industry and Brokerage Houses
Yamaichi
Daiwa Nikko
Nomura
New Japan
Kokusai Wako Kankaku
Sanyo Okasan Cosmo
Others
Mitsubishi
Tokyo
Tokai
Sakura
Sumitomo Sanwa
Dai-Ichi Kangyo
IBJ
Fuji
LTCB
Daiwa Asahi
Yamaichi
New Japan
Kokusai Wako Kankaku
Sanyo
Others
Mitsubishi
Tokyo
Tokai
Sakura
Sumitomo Sanwa
Dai-Ichi Kangyo
IBJ
Fuji
Daiwa Asahi
Sumitomo Mitsui
SMBC Nikko
Resona
Mitsubishi UFJ
Nomura
Daiwa
Mizuho
Shinko
Okasan Iwai Cosmo
Bankruptcy
Bankruptcy
1995 Current (2015)
Ban
kin
g
Secto
r
Secu
rities
Secto
r
Shinsei
Dissolved after
Alliance
Source: NICMR 1
Year Event
1997 Establishment of Nomura Asset Management Co., Ltd.: Merger of Nomura
Securities Investment Trust and Nomura Investment Management (In 2001,
Nomura Asset Management became a wholly-owned subsidiary of Nomura
Holdings)
1998 “New Business Plan”: Introduction of Matrix Management Structure
2001 Establishment of Nomura Holdings, Inc.: Introduction of Holding Company
Structure
Listing Nomura’s American Depository Receipt (ADR) on the New York Stock
Exchange
2003 Adopting “Committee System” on Nomura’s Board of Directors Structure
2007 Instinet (execution services provider) became a subsidiary of Nomura
Holdings Inc.
2008 Acquisition of Lehman Brothers' Asia-Pacific franchise and certain operations
in Europe and the Middle East.
Acquisition of Lehman Brothers' service platform in India.
Nomura’s Corporate Structure and Group Management: Historical Overview
Changes in Corporate Structure in the Last Decade
2 Source: NICMR
3
Overview of Nomura’s Strategic Moves (Concept)
Matrix
Management
Transforming
Business Models
(in Domestic
Market) “Double Wheels”
Business Models
Change in
Corporate/Group
Structure
Focus/
Capital Market
Oriented
Source: NICMR (Nomura Institute of Capital Markets Research)
Globalization
Client First
Going Overseas
Company Philosophy Basic Strategies
During the Last Decade
Strategic Moves
Financial Crises (Japan, Asia, Russia, Subprime, etc.)
Regulatory Reform (Domestic, Overseas, Global)
Competitive Environment
Compliance Issues
Roles of Securities Firms in Financial Services Industry
Advices and Values Provided by Securities Firms: More Diversified and More Technically Demanding
4
Major Business Types Significances
• Broker (Agent)
• Dealer (Principal)
• Underwriter
• Offering/ Selling
• Capital formation/raising
• Providing investment opportunities
• Intermediaries of public securities market
Major Business Lines Significances
• Retail (Distribution/Wealth Management)
• Asset Management
• Wholesale
Global Markets (Equity/Fixed Income/
Derivatives)
Investment Banking
• Others (Banking, Trust etc.)
• Financial planning/consulting
• Financial product manufacturing
• Advisory/Providing solutions
• Providing risk capital to economy
Source: NICMR
5
Historical Transition of Retail Investment Service in Japan
Brokerage of Individual
Equities
Fixed Commission System
Brokerage
Commissions
Foreign Currency-
denominated Bonds
Deregulation of Equity
Trading Commissions
Up-front
Commissions
High Growth Economy and
Inflation
Low Growth Economy and
Low Interest Rates
Mutual Funds
(Investment Trusts)
Separately Managed
Account (SMA)
Aging Clients
Inheritance
Asset Management Fees,
Wrap Account Fees
(Asset-based and Recurring)
Advising for Clients’ Inheritance
or Life Events
Maximizing Client Assets (AUM)
Mutual Fund Wrap
Bac
kg
rou
nd
C
ore
Pro
du
cts
/Se
rvic
es
R
eve
nu
e
So
urc
e
Large-scale IPOs
Acquiring Profitable
Clients
Maximizing Sales
Commissions
Increase of Number of
Customers
Maximizing Brokerages
Commissions
Ma
na
ge
me
nt
Go
als
Source: NICMR
Nomura’s Retail Division: Client Assets
Transformation of Retail Brokerage Business
Historically it has been told Nomura’s Retail segment is good at distributing financial products.
Currently the number of retail accounts surpassed approx. 5.2 million, representing almost 25% of all Japanese
securities accounts, which provides various business opportunities.
With its over JPY 100 trillion AUM, Nomura is by far the largest securities company in Japan.
6 Source: Financial Results of Nomura Holdings
Nomura’s Retail Division: Accounts with Balance
Nomura’s Retail Division: Changes in Major Revenue Accounts
Transformation of Retail Brokerage Business
Create synergies between wholesale(manufacturing of investment products) and retail(distribution) businesses
At the same time, enhance consulting sales, wealth management, DC/employer related businesses for expanding
investor base
7 Source: Financial Results of Nomura Holdings
0
20
40
60
80
100
120
140
160
180
FY2006/07 FY2007/08 FY2008/09 FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14 FY2014/15
Stock Brokerage Commissions Commissions for Distribution of Investment Trusts
Billions of Yen
Nomura’s Net Revenues (Revenue after Financial Charge Deduction): Overseas vs. Domestic
Efforts for Globalization
Developing Relatively Niche and Innovative Businesses: CMBS, Securitization, Private Equity, High Yield Debt
(Investment Management), etc.
Acquiring Europe and Asia Operation of Lehman Brothers
Aiming to become “Asia’s Global Investment Bank”
8 Source: Financial Results of Nomura Holdings
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Net Revenue (Overseas)/ Net Revenue (Consolidated)
(Linear Approximation)
Global Markets: Growth of client
1. Source: 2008 – 2014 Greenwich Associates Fixed-Income Studies for North America, Asia and Europe. Japan figures are for 2008 - 2013 yen products.
2. Japan: Tokyo Stock Exchange; US: New York Stock Exchange, NASDAQ others; UK: London Stock Exchange; Hong Kong: Hong Kong Stock Exchange.
Client business growth driven by expansion of business platform
15
2008 2014 1
Fixed Income
Clients who rank
Nomura as a meaningful
counterparty1
Equities
Market share on major
stock exchanges2
11%
4%
6%
3%
2008 Jan-Jun, 2014
Japan US UK HK Japan US UK HK
7%
3%
1% 1%
86%
1% 2% 5%
Japan Americas EMEA AEJ
95%
35% 30% 24%
Japan Americas EMEA AEJ
Investment Banking: Stronger international franchise
1. Source: Nomura, based on data from Thomson Reuters; Deals in which Nomura was involved as Co-Manager or higher role .
2. Source: Nomura, based on data from Bloomberg.
3. Source: Nomura, based on data from Thomson Reuters; Percentage on transaction value basis of M&A deals not involving Japanese companies in which Nomura played a role.
Marked improvement in international service and product capabilities Jump in international revenues
100
393
International Investment Banking revenues
(Rebased, pre-integration=100)
16
1,080 782
ECM ALF
5,598
4,326
ECM ALF1 2
2007 – 2008 (annual average) 2010 – 2013 (annual average)
1 2
2006 – 2008 (annual average) 2010 – 2013 (annual average)
10% 55%
(millions of USD)
International
ECM/ALF
mandates
Non-Japan
M&A
mandates3
#40 #14
Global league table Pre-integration
FY03/04 –
FY07/08
Post integration
FY09/10 –
FY13/14
Wholesale revenues and expenses rose sharply after integration
Wholesale revenues and expenses
1. Five year annual average.
2. Exchange rate is six month average of month-end spot rate. FY2011/12 : 1H=Y79.16, 2H=Y78.48; F2012/13: 1H=Y78.87, 2H=Y87.66; FY2013/14: 1H=Y98.58, 2H=Y102.18. 17
(200)
0
200
400
600
800
1,000
収益
費用
FY03/04 FY04/05 FY05/06 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14
(billions
of yen)
Pre-integration
(FY2003/04 – FY2007/08)
Post integration
(FY2009/10 – FY2013/14)
Net
revenue1 1.8x
$2,799
$3,789
$3,892
$3,189
2,000
3,000
4,000
5,000
収益(米ドル)
費用(米ドル)
FY2011/12 FY2012/13 FY2013/14
1H 2H 1H 2H 1H 2H
Revenues and expenses on USD basis2
(millions of USD)
Aligned costs to environment: “Fit for the Future”
Net
revenue
+35% Y385.6bn Y676.1bn
Int’l
27% Int’l
66%
Net revenue
Expenses
Net revenue
Expenses
Expenses
-18%
Through “Fit for the Future” exercise, a quality of human resource has made an improvement.
The exercise has also contributed to cementing a team spirit across business divisions and boarders.
12 Source: Nomura
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Jun-16
Japan
Asia&Oceania
US
EMEA
+2,632
(+19%)
+8,630
(211%)
Japan : Overseas
77:23
Japan : Overseas
57:43
Human Resource – Driver of our business
Lehman integration was a stepping stone for Nomura’s globalization.
Higher profile in the industry thanks to the integration has made it possible for Nomura to attract talents across
the regions and countries.
While we appreciate a diversity of our staffs, we’re trying to achieve sharing the same level of understanding in
Nomura founding principles and corporate ethics.
Retail
AM
WS
Other WS
Non-WS
WS
Non-WS
WS
Non-WS
Leveraging global platform to diversify revenues
1. Excluding Nomura Real Estate Holdings
FY2005/06 – FY2007/08 FY2012/13 – FY2014/15 FY2019/20 (rough estimate)
Firm-wide annual revenues (average)
Japan equities business
Foreign bonds and niche products for
Japanese institutional investors
Approx.16% Approx.30% Approx.40% International revenues
Approx.Y1trn Approx.Y1.5trn1 Y1.8 – Y1.9trn
Products and services for global clients
Increase in cross-border deals
Further develop client businesses
Expand non-Wholesale international
businesses
Loss Break-even Approx. 25% of firm-wide
pretax income
International
contribution
Americas
Japan
AEJ
EMEA
EMEA
Japan
AEJ
Firm-wide annual revenues (average)
International revenues
Firm-wide annual revenues
International revenues
Americas
International
contribution International
contribution
Japan
International
Japan
Americas
EMEA
AEJ
The foundation has been built.
Listening well to and working hard with our clients on the highest level of corporate ethics sharing our founding
principles should enable us to achieve the goal.
Disclaimer
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instrument, including securities issued by Nomura or any affiliate thereof. Offers to sell, sales, solicitations to buy, or purchases of any
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statements” within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Any such
statements must be read in the context of the offering materials pursuant to which any securities may be offered or sold in the United
States. These forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of
which, by their nature, are inherently uncertain and outside our control. Actual results and financial condition may differ, possibly
materially, from what is indicated in those forward-looking statements. You should not place undue reliance on any forward-looking
statement and should consider all of the following uncertainties and risk factors, as well as those more fully discussed under Nomura’s most recent Annual Report on Form 20-F and other reports filed with the U.S. Securities and Exchange Commission (“SEC”) that are
available on Nomura’s website (http://www.nomura.com) and on the SEC‘s website (http://www.sec.gov); Important risk factors that
could cause actual results to differ from those in specific forward-looking statements include, without limitation, economic and market
conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency
exchange rates, security valuations, competitive conditions and size, and the number and timing of transactions.
Forward-looking statements speak only as of the date they are made, and Nomura undertakes no obligation to update any forward-
looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
The consolidated financial information in this document is unaudited.